EPS of $-0.03 increased by 84.4% from previous year
Gross margin of 23.4%
Net income of -2.94M
"We delivered on our updated guidance with organic net sales growth ahead of our guidance and adjusted EBITDA at the upper end of our guidance and continued progress in adjusted gross margin expansion." - Wendy Davidson
The Hain Celestial Group Inc (HAIN) QQ4 2024 Earnings Analysis: Hain Reimagined Drives Margin Expansion, Free Cash Flow Growth, and a Clear Path to Growth in FY2025
Executive Summary
The Hain Celestial Group delivered a challenging fourth quarter of fiscal 2024 with negative organic net sales in the quarter (-4% YoY) driven by North America softness in infant formula and Personal Care, even as International beverages and certain snack platforms showed resilience. Management stressed progress under the Hain Reimagined program, highlighting $65 million of end-to-end fuel savings in FY2024, a 3-day reduction in inventory, a 15-day extension of days payable, and ongoing debt paydown that improved leverage. Despite the near-term quarterly headwinds, the company finished FY2024 with 85% of the business in growth and organic net sales in the grow/maintain cohort up 3% for the year, underscoring the pivot toward growth as the base for FY2025. In Q4, adjusted EBITDA was $40 million with an adjusted gross margin of 23.4%, and full-year adjusted EBITDA was $155 million with an adjusted gross margin of 22.4%, reflecting productivity gains and pricing from fuel and revenue growth management (RGM). The company guided FY2025 to flat or better organic net sales, mid-single-digit adjusted EBITDA growth, and at least 125 basis points of gross margin expansion, with free cash flow of at least $60 million. Management emphasized that the near-term cadence would feature a tougher first half (with negative YoY organic growth in Q1) followed by stronger momentum in the back half as infant formula supply normalizes, Garden Veggie/Terra distribution expands, and continued brand-driven investments gain traction. The back half growth is expected to be powered by formula recovery, Snack portfolio expansion, and geographic footprint advantages as part of the Hain Reimagined plan.
Key Performance Indicators
Revenue
418.80M
QoQ: -4.46% | YoY:-6.48%
Gross Profit
98.00M
23.40% margin
QoQ: 1.38% | YoY:-2.72%
Operating Income
12.01M
QoQ: 143.05% | YoY:-0.68%
Net Income
-2.94M
QoQ: 93.91% | YoY:84.29%
EPS
-0.03
QoQ: 93.94% | YoY:84.43%
Revenue Trend
Margin Analysis
Key Insights
Q4 2024 Revenue: $418.799 million; Organic net sales YoY: -4.0%; Organic net sales QoQ not disclosed in detail for the quarter.
Gross profit: $98.003 million; Gross margin (adjusted): 23.4% in Q4, up ~70bp YoY.
EBITDA: Q4 adjusted EBITDA $40.0 million; Adjusted EBITDA margin 9.4%; Full-year 2024 adjusted EBITDA $155.0 million (prior year $167 million).
Net income (GAAP): Q4 2024 net income = -$2.937 million; Net income margin = -0.70%.
EPS (diluted): Q4 -$0.0327; Full-year adjusted net income $0.33 per diluted share; Full-year GAAP net income not disclosed in the provided data.
Financial Highlights
Quarterly and full-year highlights (USD, unless noted):
- Q4 2024 Revenue: $418.799 million; Organic net sales YoY: -4.0%; Organic net sales QoQ not disclosed in detail for the quarter.
- Gross profit: $98.003 million; Gross margin (adjusted): 23.4% in Q4, up ~70bp YoY.
- EBITDA: Q4 adjusted EBITDA $40.0 million; Adjusted EBITDA margin 9.4%; Full-year 2024 adjusted EBITDA $155.0 million (prior year $167 million).
- Net income (GAAP): Q4 2024 net income = -$2.937 million; Net income margin = -0.70%.
- EPS (diluted): Q4 -$0.0327; Full-year adjusted net income $0.33 per diluted share; Full-year GAAP net income not disclosed in the provided data.
- SG&A: Q4 SG&A $72.79 million (17.3% of net sales); Full-year SG&A $290.0 million (16.7% of net sales).
- Adjusted gross margin: 23.4% in Q4; Full-year adjusted gross margin 22.4%.
- Cash flow and liquidity: Q4 free cash flow $30.7 million; Full-year free cash flow $83.0 million.
- Capital expenditure: Q4 $9.0 million; Full-year 2024 capex $33.0 million; 2025 guided capex around $50 million.
- Balance sheet: Net debt approximately $690 million (management indicated leverage around 3.7x); cash at end of period $54.3 million; working capital improvements aided debt paydown and leverage reduction.
- Segment performance (Q4): North America organic net sales declined ~5% YoY; International organic net sales declined ~4% YoY; Beverages in International showed strength while meat-free and other categories in International softened. Adjusted gross margins: North America 22.6% (down ~20bp YoY), International 24.8% (up ~210bp YoY).
- Liquidity and leverage: Net leverage around 3.7x; cash flow generation supported debt reduction, with management targeting leverage of roughly 3x by 2027 per the Hain Reimagined long-term goals.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
418.80M
-6.48%
-4.46%
Gross Profit
98.00M
-2.72%
1.38%
Operating Income
12.01M
-0.68%
143.05%
Net Income
-2.94M
84.29%
93.91%
EPS
-0.03
84.43%
93.94%
Key Financial Ratios
currentRatio
1.98
grossProfitMargin
23.4%
operatingProfitMargin
2.87%
netProfitMargin
-0.7%
returnOnAssets
-0.14%
returnOnEquity
-0.31%
debtEquityRatio
0.89
operatingCashFlowPerShare
$0.44
freeCashFlowPerShare
$0.34
priceToBookRatio
0.66
priceEarningsRatio
-53.23
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key insights from the earnings call and management discussion, grouped by theme:
- Strategy and growth roadmap: "We are pivoting our focus to stronger commercial execution to deliver top and bottom line growth in fiscal 2025... pivot to growth in fiscal 2025" (Wendy Davidson). Management reiterated the four pillars of Hain Reimagined: Focus, Global Operating Model, Fuel, and Capabilities, with a goal of 3%+ organic growth and substantial gross-margin expansion by 2027.
- Fuel and efficiency: Management highlighted end-to-end operational efficiency delivering $65 million in savings for FY2024, ahead of the $61 million target, and a robust productivity pipeline for FY2025 to sustain growth with improved gross margins and reduced debt (Wendy Davidson; Lee Boyce).
- Channel and portfolio evolution: The company emphasized aggressive shift toward away-from-home and e-commerce, with Snack and Garden Veggie/Terra momentum in C-store and online channels; Hartley’s UK feature expansion and 800 new shippers planned for back-to-school season (Wendy Davidson).
- Formula supply recovery and growth cadence: The management commentary underscored expectations for infant formula supply recovery in H1 2025, with stronger growth in Earth’s Best in the back half as supply normalizes and distribution recovers (Wendy Davidson; Lee Boyce).
- Financial health and guidance cadence: The executives stressed that organic net sales for FY2025 would reasonably improve over FY2024, with back-half acceleration anticipated and forEx excluded from the organic metric going forward; they reaffirmed the long-term targets of 3%+ CAGR in organic sales, 400–500bp gross margin expansion, and 12%+ adjusted EBITDA margin by FY2027 (Lee Boyce).
We delivered on our updated guidance with organic net sales growth ahead of our guidance and adjusted EBITDA at the upper end of our guidance and continued progress in adjusted gross margin expansion.
— Wendy Davidson
There are three drivers in there. The one you just mentioned is formula and what we're lapping; we anticipate seeing formula build up as we go through the year.
— Lee Boyce
Forward Guidance
Outlook and anticipated trajectory for FY2025 and beyond:
- Organic net sales: Flat or better for FY2025, with expectations of improving year-over-year as the year progresses. The company expects negative YoY growth in Q1 2025 (similar to Q4 2024) with flat in Q2 and acceleration in the second half, driven by formula recovery and promotional timing shifts in Snacks.
- Adjusted EBITDA: Growth in the mid-single digits for FY2025, supported by efficiency gains, revenue growth management, and ongoing cost discipline.
- Gross margin: Expansion of at least 125 basis points in FY2025, aided by productivity gains and price/mix effects from the fuel program and portfolio optimization.
- Free cash flow: At least $60 million for FY2025, aided by working capital improvements and improved profitability.
- Key drivers and risks: The shape hinges on infant formula supply normalization, continued execution in Snacks and Hartley’s UK expansion, and the ability to convert new distribution into sustained velocity. Management noted that forEx is not expected to be a significant driver of variance in 2025. Investors should monitor: (1) pace of formula supply recovery and velocity recovery in Earth's Best, (2) effectiveness of RGM, trade spend efficiency, and mix improvements, (3) working capital dynamics and leverage trajectory, (4) execution in key growth channels (away-from-home, e-commerce) and brand campaigns (Garden Veggie, Celestial Seasonings master brand campaigns).
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
HAIN Focus
23.40%
2.87%
-0.31%
-53.23%
BRBR
36.90%
20.20%
-34.80%
27.59%
FLO
48.80%
5.91%
3.06%
24.99%
INGR
20.80%
9.84%
3.65%
13.55%
JJSF
31.80%
9.34%
3.10%
27.94%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
The investment thesis for HAIN hinges on execution of the Hain Reimagined plan and the timely recovery of infant formula supply, which are pivotal for FY2025. The company has demonstrated resilience through significant margin expansion and robust free cash flow generation in FY2024, supported by a disciplined focus on capital allocation and debt reduction. The guidance for FY2025—flat or better organic net sales, mid-single-digit adjusted EBITDA growth, and at least 125bp gross margin expansion with free cash flow of at least $60 million—provides a constructive, achievable path if formula supply recovers and Snacks and International beverage momentum continues. The stock trades with a meaningful discount relative to traditional packaged foods peers (given negative GAAP earnings and modest near-term organic growth), but offers a potential re-rating if HAIN sustainably executes its turnaround, expands gross margins, and drives a higher and more stable free cash flow profile. Investors should monitor: (1) pace and durability of infant formula supply normalization and its impact on Earth's Best and overall brand velocity, (2) continued margin expansion and RGM-driven leverage improvements, (3) progress against the gross-margin expansion target, and (4) integration benefits from portfolio exits and the cadence of 2025 top-line acceleration in the back half.
Key Investment Factors
Growth Potential
Strategic catalysts include: (a) formula supply normalization enabling Earth’s Best growth in H2 2025, (b) Snacks growth momentum with Garden Veggie Flavor Burst, Terra improvements, and expanded Hartley’s shelf space in the UK and additional 6,600 new stores in the U.S., (c) international beverages and plant-based growth through Natumi, Oat category innovations, and Celestial Seasonings campaign, and (d) an accelerated brand-building approach leveraging the larger scale with the nimble, challenger-brand mindset.
Profitability Risk
Key risks include: (1) continued volatility in infant formula supply and pricing, (2) cost inflation and input volatility impacting gross margins, (3) category headwinds in Personal Care and meat-free in select regions, (4) integration risks from portfolio exits (e.g., Queen Helene, Thinsters) and disruption to distribution during channel transitions, (5) macroeconomic pressures and currency movements that could affect reported results if FX moves beyond expectations.
Financial Position
Financial health and leverage improved through the FY2024 fuel initiatives and working capital improvements, with net debt around $690 million to $781 million on the reported period-end balance and leverage around 3.7x; cash on hand approximately $54 million; capex disciplined at $33 million in FY2024 and guidance for ~ $50 million in FY2025; free cash flow increased to $83 million for FY2024. Management aims for 3x or lower net debt to adjusted EBITDA by 2027 as part of the long-term Hain Reimagined targets. The company plans to sustain margin expansion (125bp+ in 2025) and maintain deleveraging through debt paydown and cash flow generation.
SWOT Analysis
Strengths
Diversified, global product portfolio with leading brands (Celestial Seasonings, Earth's Best, Ella's Kitchen) and strong geographic reach (~80 countries).
Fuel initiatives delivering meaningful cost savings and operating leverage (FY2024 $65m savings; backlog of productivity for FY2025).
Improved working capital dynamics: -3 days inventory, +15 days payable; free cash flow generation of $83m in FY2024.
Portfolio simplification and category exits reducing complexity and enabling a higher-velocity, higher-margin brand mix.
Platform for growth via channel expansion (away-from-home, e-commerce) and strong Snacking momentum (Garden Veggie Flavor Burst, Terra improvements).
Weaknesses
Q4 2024 organic net sales declined 4% YoY, with North America softness in infant formula and Personal Care; margin and profitability pressured by volume deleverage in NA.
GAAP net income for the quarter negative; ongoing high restructuring charges; reliance on turnaround of formula supply and consumer demand.
Meat-free and Personal Care segments face structural headwinds and portfolio optimization may have near-term earnings variability.
FX and inflation remain potential sources of volatility; some headwinds in front-half 2025 guidance due to promotional timing and portfolio realignment.
Opportunities
Infant formula supply recovery in H1 2025, with Earth’s Best back to full distribution and growth in back-half as supply normalizes.
Snack portfolio expansion in U.S. and UK with additional distribution (Hartley’s, Garden Veggie, Terra) and master-brand campaigns to drive household penetration.
Continued international beverage growth (Natumi, non-dairy) and new oat category innovations to capture premium growth.
Master-brand campaigns and new product launches (Sleepytime, Garden Veggie Flavor Burst, Celestial Seasonings master-brand) to boost category share.
Threats
Sustained supplier constraints or price volatility for infant formula ingredients; potential supply chain disruptions.
Competitive dynamics in the natural/organic space and channel promotions that compress margins.
Regulatory changes or tariffs affecting cross-border trade and input costs.
Execution risk associated with channel expansion and SKU rationalization; gaps in distribution could impact near-term momentum.
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